Goal 1: mobilising revenues

In some African countries, the desire to increase revenues has been the main reason for adopting user fees. The share of revenues coming from user fees has been small, well below the 10 or 20 per cent anticipated in World Bank documents (see Lessons from cost recovery in health).

However, Health financing in WHO member states shows that total out-of-pocket expenditure as a proportion of total health spending in Africa has increased substantially since the 1980s. There is also some evidence to suggest that revenues rise over time after being introduced, due to improved collection, more strictly imposed exemptions, increasing prices, and increased utilisation as populations become used to paying for social services.

Even if the share of user fee revenue seems low, it is often argued that this extra revenue source at the local level enables purchase of items that would otherwise not be afforded, such as a continuous stock of drugs, incentive payments for staff or additional staff. These have proven to be essential in keeping social services functioning and in improving the quality of care.

User fee revenues have been low – but sometimes vital

User fees, health staff incentives, and service utilization in Kabarole District, Uganda argues that the proceeds from user fees enabled better incentives to be provided to health staff in remote areas, improving the quality of services. The effects of user fees in the Volta region of Ghana finds that user fees were important for non-salary operating costs. However, Mobilizing resources for health emphasises that these costs typically account for less than 30 per cent of total health sector costs.

Revenue figures also need to take into account the costs of collecting user fees. These include staff time and material costs for receipts, accounting, managing money, and banking. Lessons from cost recovery in health argues that little recognition has been given to these costs, or to the capacity needed for collecting fees and managing the proceeds in the interests of the poor. There is very little evidence on these costs. Some reports suggest that they are large relative to the amounts collected, although the true cost is difficult to determine when staff have multiple tasks.

Formal user fees could potentially have a beneficial effect on access if they led to a reduction in unofficial fees, which could be high or unpredictable. In practice it is difficult to determine whether this has happened, because few research studies have reported on the extent and nature of unofficial charges. See The cost of free healthcare: under-the-counter payments in Bulgaria and Free does not mean affordable: maternity patient expenditure in a public hospital in Bangladesh.